Securitization

Top Securitization Stories

Cembra Money Bank is set to print the first Swiss ABS to hit the market since the Swiss National Bank abandoned its franc-euro peg, having increased the revolving period for its third securitization of auto lease receivables.

Volkswagen Financial Services has set out to add Australian dollars to its growing list of currencies for auto ABS prints already this year, after issuing guidance on its second securitization of Australian auto loan receivables.

Despite investor anger over the European Central Bank’s entry into the European ABS market as a buyer in November, and widespread disappointment over its pace of intervention, they are now enjoying what some claim are the best opportunities in years.

The European ABS industry is inching closer to the new comprehensive approach to regulation it has been craving since the financial crisis, after the European Commission on Wednesday launched a consultation on securitization that appears heavily informed by market participants’ long held concerns.

Michael Millette, head of structured finance at Goldman Sachs, is leaving the investment bank at the end of February. However, the 49 year old industry veteran is not officially retiring from the structured finance industry, according to an individual familiar with his departure.

Cantor Fitzgerald has hired two MBS trading heads from Bank of America Merrill Lynch, the firm announced on Thursday. The new hires, Brendan Donnelly and Mohil Gupta, join Cantor as managing directors in MBS sales and trading.

Sandler O’Neil & Partners have hired CMBS traders David Cook and Andrew Flick from Brean Capital. The pair will focus on building a CMBS franchise at Sandler O’Neil, the investment bank said in a release on Monday.

William Shuey has joined Opus Capital Markets Consultants as the due diligence provider’s director of securitization. He will oversee securitization processes with a focus on RMBS compliance, Opus announced on Monday.

Deutsche Bank’s head of non-agency RMBS and consumer ABS trading has taken over CLO trading after the departure of Richard Rizzo last week. People familiar with the situation at the bank, which just priced its first US CLO of the year, say it is still fully committed to the business, but some investors are sceptical.

UK-headquartered Lloyds Bank has transferred yet another senior banker to its New York outpost, as it attempts to win market share in carefully-selected parts of the US capital markets such as corporate debt and securitization. The new addition will focus on North American institutional investor coverage for the bank’s financial institutions team.

A portfolio manager mainly focused on CLOs acquired from Gulf Stream in 2011 has left Apollo Global Management, GlobalCapital understands. Separately, Apollo is marketing its first US CLO of 2015, ALM 12, with Morgan Stanley as arranger.

The Export-Import Bank of the United States has hired the Overseas Private Investment Corporation’s former vice president of structured finance to oversee its structured finance transactions, according to a statement from the Ex-Im Bank.

Don’t be distracted by the razzmatazz. Peer-to-peer lenders walk like banks and quack like them. As a retail bond offering from Wellesley & Co in the UK makes clear, bankishness is one of the best things about P2P. But don’t go thinking the risks are the same.

There was muted celebration in the European ABS market this week as yet another rule making body began to row back from the punitive regulatory treatment imposed on the industry in the wake of the financial crisis.

The omerta code works fine for a weekend in Sin City, but not for one of the US’s most important funding products. The securitization market must adapt to the spirit, not just the letter, of new transparency requirements — it is quickly running out of excuses not to do so.

The US’s Federal Housing Finance Agency and the Federal Housing Administration are locked in yet another round of fisticuffs, with market share as the prize. If the private label RMBS market is to return, the government needs to stop hitting itself.

Mention “Basel capital charges” to someone in the securitization business and prepare for a shudder — the industry has had to swallow new rules every year for three years, and costs could still cripple the market. But help could be at hand from another set of Basel rules.

Securitization has come a long way in the past two years, not least in the minds of regulators. But the industry needs to start managing expectations. It is not going to solve Europe's problems on its own.

Since making its decision to purchase asset backed securities, the policy message from the European Central Bank has floated somewhere between credit easing and quantitative easing. One won’t work, and the other should have nothing to do with ABS.

The European Central Bank put a lot of effort into telling everyone securitization’s direct link to the real economy was the reason it deserved to be the principal target of asset purchases. Now that illusion has been shattered by reports it is considering corporate bond purchases, the ECB should just get on with the broad-based cash injection it clearly intends.

The eternal tussle between equity and triple-A investors in collateralised loan obligations intensified this week, as a widening in triple-A CLO spreads drove down equity returns even further and forced some arrangers and managers to make concessions in order to lock senior debt investors into their deals.

The Consumer Financial Protection Bureau wants to make written complaints public on its online consumer complaints database. Unsurprisingly, the Mortgage Bankers Association objects. But when online customer reviews have empowered consumers in other sectors, why should the banking industry get special treatment?

The European Central Bank has finally put its money where its mouth has been for some time on reviving European securitization. But if it doesn’t help banks shift the riskiest tranches off their books, it will have changed absolutely nothing.

Some market commentators seem to think the European Central Bank's ABS purchase programme is not the real deal, because it will be limited in size by the low volume of placed securitizations and the difficulty of pricing off-market deals. One research team estimates the ECB might buy €40bn over three years. But this seriously underestimates the potency of the ECB’s move.

European leveraged loan issuers expect the good times to keep rolling this autumn. But issuers considering cross-border transactions should be cautious. Domestic supply is building in the US and this could mean lenders push back on margins.

The European Central Bank’s announcement of a third covered bond purchase programme is destined for failure. The size of the public market for benchmark covered bonds stands at €570bn, suggesting the central bank would be unable to achieve anything close to its €500bn target through covered bonds alone.

News last week that a minor tweak in S&P’s corporate loan rating methodology could win them back market share in the lucrative new issue CLO market reignited the debate about the business model of issuers paying to be rated. Even if S&P’s internal controls and the Chinese wall which they insist exists between commercial and analytical considerations is robust, market participants clearly do not believe it. It is time to overhaul the way the credit ratings industry works.